Managing By Values

Many years ago, I heard John Naisbitt give a speech on his book Reinventing the Corporation and was intrigued by a concept he called “Fortunate 500” companies. We all know about Fortune 500 companies that are ranked on revenue, profits, and market value. But John defined Fortunate 500 companies as organizations measured by the quality of service available to customers and the quality of life accessible to its employees.

Over the next few years, I worked with several people to put a process to this idea. The result was the book I coauthored with Michael O’Connor, Managing By Values. The three elements of the Managing By Values process are:

Identify your core values

Communicate the core values

Align the values to your business practices

The most important part of this process is to decide what is most important to your company. Once you gain that clarity and define your core values, you must constantly communicate them to your employees. Use the values as a guidebook for how you make decisions and operate on a daily basis to show employees that you are completely committed to them. And make sure that your internal business practices are aligned with your values so individuals and teams can function easily and not hit road blocks because an internal process doesn’t support the values.

When you manage by values, you’ll have delighted customers who keep coming back, inspired employees who give their best each day, owners who enjoy profits made in an ethically fair manner, and suppliers, vendors and distributors who thrive on the mutual trust and respect they feel toward your company.

We certainly found this to be true during the economic downturn of 2008-2009. It became clear to us in February 2009 that we would probably fall, at a minimum, 20 percent short of our revenue goals for the year. The first thought of some was that we would need to downsize—get rid of some of our people. While that would be legal, we didn’t think it was consistent with the rank-ordered values we had at the time. Our #1 value was Ethics—doing the right thing, followed by Relationships—gaining mutual trust and respect with our people, customers, and suppliers; followed by Success—running a profitable, well-run organization. To us, downsizing would focus on our #3 value but miss doing the right thing and damage our relationships with our people. As a result, we involved everyone at an all-company meeting and together figured out how to cut costs with a minimum impact on people’s lives.

Fortunate 500 is a clever play on words but it is actually a very powerful concept—and perhaps even more important now than it was when I first heard about it. Today people, especially millennials entering the workforce, want to know that their work is worthwhile and they are contributing to a bigger cause. If employees share the common values of a company, they can achieve extraordinary results that give their organization a competitive edge.